A company that runs a chain of restaurants here would like to expand to the whole country in a short duration of time. The restaurant started with a unique idea of providing hygienic food at affordable price and with option of delivery at home. But with time, there was not much improvement in food quality while news of expansion started trickling in.
A beauty salon which my wife used to visit opened a new branch somewhere else while ignoring customers at the current branch. Naturally she stopped going there.
Businesses that scale without making any significant change to the value offered are going to lose customers to competitors.
Scale is necessary to compete against other competitors and also to increase profitability. But is scale alone guaranteed to provide a sustainable business year after year? The most important part of the equation is loyal customers. Surely in a booming economy, it is much easier to gain new customers than to work hard upon the expectations of old ones.
What is your core business?
In the above cases it is about food and service. If the food quality has gone down or current customers are dissatisfied, it is a strong enough sign that there are some problems with current process. When business is scaled these problems too will be replicated and would now exist at multiple business locations. Then it would need far more resources to ease them out (just like in a large organization to do anything multiple processes need to be followed). They are often ignored when business is in expansion mode because other things are priority.
Customer really don’t care about expansion (only you and your investors do)
It is really important to understand that expansion in business is not equal to adding value to the offering. If expansion brings a downfall of overall customer satisfaction, it is going to hurt the core business. There are plenty of examples where businesses could not handle customer expectations after explosive growth and suffered losses.
Great businesses grow slowly. Even in exceptional cases when they grow fast, they quickly correct their problems. Customer really does not care if a business is expanding. That is for the business to worry about. All customer wants is , if she is getting same value or more than before. If expansion means not taking care of her, consider that she would move to competitor soon.
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